Drought policy is complicated and there are inevitable trade-offs

While attention is focused on responding to the current situation, it is important to understand the wider context – and tensions – around drought policy and climate change. Most importantly, while supporting those in need is appropriate, there is a risk that some interventions intended to assist farmers during droughts can have negative consequences in the longer term.

For example, the process of shifting resources between farms as some grow and others shrink or disappear is essential for industry-level productivity growth – ABARES has estimated that it could account for as much as half of all the productivity growth in Australian agriculture over the last three decades. Policies that impede structural adjustment have the potential to weaken overall productivity growth and hence competitiveness in international markets.